As the dust settles from another Federal Budget, there was an important takeaway that every small business needs to be aware of. The instant asset write off has been extended to 30 June 2019, giving small businesses another 12 months to take advantage of the scheme.
Introduced as part of the 2015 budget, this allows small businesses to instantly write off assets under $20,000 instead of depreciating it over its useful life. To qualify for the scheme the entity will need to have revenue lower than $10 million for the financial year. Although many were hoping the Treasurer Scott Morrison would announce that this was to become permanent fixture, it does present a good tax planning opportunity for the short to medium term.
This can be the impetus to purchase new equipment that will assist in daily operations or help your business expand and grow. It provides a significant cash flow boost as all the benefit of the deduction is captured in the first year. However, the extra deduction will need to be weighed against the real cost of the asset upfront. It will be important to bear this in mind as the real benefit of the asset is its usefulness to the business, not the deduction it provides.
As we are nearing the end of the 2018 financial year, small businesses should be considering whether to utilise this scheme now, or postpone any purchases into the 2019 year.
If you are small business owner and would like to receive advice on the instant asset write off and how you can apply it to your business, please contact one of our Allan Hall advisors on +61 2 9981 2300 or at [email protected]
This article was written by Nick Tankard, Accountant, Allan Hall Business Advisors.